Director & No Income

Director & No Income

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Hi

If a person is a director of a limited company in an advisory position and takes no salary, i.e. not employed by the limited company and doesnt take any dividends then will he have any tax implications assuming that they have no other income.

Also, he is in receipt of some kind of benefit for caring for his wife who has a mental disorder - will this be impacted upon once HMRC are notified of his directorship after the company is set up.

Thanks

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By Euan MacLennan
30th Mar 2011 12:31

Eh?

If he is not being paid a salary, no P45 or P46 would be submitted to HMRC, so how would they know he was a director?  Unless, perhaps, he was a director from the start of the company and you put his name on the form CT41G - so, don't.

He couldn't receive dividends unless he is also a shareholder.

I would guess that he is receiving Carer's Allowance which is a taxable benefit, but if he receives no income from being a director, this cannot affect his tax position, even if HMRC knows that he is a director.  Also, his entitlement to the allowance is not affected unless he is "gainfully employed" elsewhere, which he would not be - he just needs to continue caring for a severely disabled person for a minimum of 35 hours a week.

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By a_m
30th Mar 2011 14:09

Thanks Euan

Thanks for your advice.

So would it be best for this person to become a director after submitting the CT41G?

He is just worried that his benefits are going to be affected.

He isgenuinely only going to be advising and taking travel expenses.

Regards

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